The American Rental Association (ARA) latest forecast calls for
equipment rental industry revenue growth in the United States of 6.7
percent in 2016 and 2017, 6.2 percent in 2018 and 5.8 percent in 2019 to
reach $48.7 billion.

The growth pace is slightly more moderate than the previous two years,
but the industry’s progress is consistently positive regardless of
changes in oil and gas, construction and other segments equipment rental
companies serve.

“The performance of the equipment rental industry since the recession
has been very positive and as auxiliary industries recover and grow, we
anticipate equipment rental revenue growth to meet the forecast of the
next five years,” says Christine Wehrman, ARA CEO and executive vice
president.

“This means equipment rental companies can prepare for steady growth,
plan for expanding their markets and build inventory to meet their
customer demand. The forecast also shows that many customers who have
turned to renting equipment during and after the recession have seen the
benefits and will continue to rent to control their costs,” Wehrman
says. “The secular shift to rental is here to stay.”

The economic analysis from the ARA Rental Market Monitor™
subscription service suggests that the ongoing rebound in real
residential construction in 2015 will help fuel the growth in the
construction and industrial equipment and the general tool rental
segments.

“A 2015-19 compound annual growth rate (CAGR) of 2.7 percent is
projected for real total construction with real nonresidential growing
1.0 percent and real residential growing 5.7 percent. This will drive
revenue growth in the construction and industrial segment and the
general tool segment, which will average annual revenue increases of 6.5
percent and 6.7 percent respectively, over the period,” according to the
latest analysis provided by IHS Economics, the forecasting firm that
provides data and analyses for the ARA Rental Market Monitor.

According to the ARA Rental Market Monitor, party and
event rentals will “benefit from continued improvement in consumer
spending and rental revenue is projected to show a 2.6 percent CAGR over
the 2015-19 period. Total equipment rental revenue is expected to grow
at a CAGR of 6.3 percent between 2015 and 2019, reaching $48.7 billion
in 2019.”

The short-term forecast for Canada is more subdued in 2016, with
expectations of 0.8 percent growth in equipment rental revenue to reach
$4.98 billion, with a greater rebound of 5.7 percent in 2017, 6.3
percent in 2018 and 5.6 percent in 2019 to reach $5.9 billion.

“Lower oil prices will put some downward pressure on oil sands
investment, but prices are expected to bottom out above the point at
which oil sands become unprofitable and will rise steadily to over $80 a
barrel by the end of 2018,” according to the ARA Rental Market
Monitor.

In Canada, according to the ARA Rental Market Monitor,
“even with the modest outlook for construction markets, construction and
industrial equipment and general tool revenues are expected to grow at
CAGRs of 4.7 percent and 4.3 percent, respectively, through 2019. Party
and event rental is expected to grow at a CAGR of 3.6 percent,
benefitting from increases in overall consumer spending, as well as
growth in consumer expenditures on services. Total rental revenue is
projected to grow at a CAGR of 4.6 percent over the 2015-19 period.”

About ARA: (www.ARArental.org)
The American Rental Association, Moline, Ill., is an international
trade association for owners of equipment rental businesses and the
manufacturers and suppliers of construction/industrial, general tool and
party/event rental equipment. ARA members, which include more than 9,300
rental businesses and nearly 1,000 manufacturers and suppliers, are
located in every U.S. state, every Canadian province and more than 30
countries worldwide. Founded in 1955, ARA is the source for information,
advocacy, risk management, business development tools, education and
training, networking and marketplace opportunities for the equipment
rental industry throughout the world.

About IHS (www.ihs.com):
IHS (NYSE: IHS) is the leading source of insight, analytics and
expertise in critical areas that shape today’s business landscape.
Businesses and governments in more than 150 countries around the globe
rely on the comprehensive content, expert independent analysis and
flexible delivery methods of IHS to make high-impact decisions and
develop strategies with speed and confidence. IHS has been in business
since 1959 and became a publicly traded company on the New York Stock
Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is
committed to sustainable, profitable growth and employs about 8,800
people in 32 countries around the world.

E&Ps Locking in Cash Flows and Sales Prices OPEC’s agreement to cut production levels has kicked off a rush among shale oil companies to hedge their oil price risk above $50 for 2017 and 2018. The number of E&Ps selling oil for delivery next year has pushed the WTI forward curve into slight backwardation after two years of contango. Compare[Read More…]